HomeMy WebLinkAboutNovember 7Finance and Investment Committee Regular Meeting
Town of Los Altos Hills
Town Hall, Wednesday, November 7, 2016
The meeting was called to order at 4:00 pm by Chairman Sloss.
Members present: Allan Epstein, Kjell Karlsson, Betty Kayton, Chris Nam, Bill Silver, Roddy
Sloss and Chris Welborn.
Members absent: Susan Mason, Stan Mok
Associate members: Jim Lai (absent); Frank Lloyd (present)
Council present: John Harpootlian; Gary Waldeck
Staff present: Pak Lin, Administrative Services Director and Karen Huang, Finance Manager
Public present: Peter Evans
Guest present: David Alvey, Partner, Maze & Associates
Approval of minutes
September 12, 2016 meeting minutes were approved as presented by members who attended that meeting except
that the date on the first page read July 6, 2016 in error and was subsequently corrected by the Secretary.
Review of annual audit and draft CAFR for fiscal year June 30, 2016 - D Alvey, PLin, and K Huang
Ms. Lin sent electronic CAFR copies to scheduled attendees on Friday preceding the meeting and handed out
hard copies at the meeting along with a presentation prepared by Karen Huang. Mr. Alvey initiated the
presentation noting that the audit was completed, that Maze & Associates audit opinion was”clean” and was
expected to be dated either today or if substantive changes resulted from the Committees post meeting review,
then not later than the resolution of those comments. Mr. Alvey noted that no “material weaknesses” or
“significant deficiencies” in internal control were noted. During Ms. Huang’s presentation committee members
stated that insufficient time was provided to complete their review of the CAFR and Ms. Lin indicated that the
document would not be finalized until comments were received and addressed. Ms. Lin stated she would
assume all comments will be received by November 18, 2016. Comments made during the presentation
included a concern that CalPERS measurement of unrecorded pension liabilities may be significantly low due to
unreasonably aggressive earning assumptions and that the Town should continue to provide significant
incremental reserves. In response to questions on accounting for pension benefits, Mr. Alvey explained that the
basic actuarial work is approximately two years behind and that estimates of the effects of changes during the
intervening two years are included in the pension expense and liability calculations in accordance with GASB
guidance. Ms. Lin and Ms. Huang explained accounting classification changes made in MD&A and the
financial statements that affect historical comparability as well as budget comparability. A discussion of the
significant General Fund Net Position favorable variance to budget at June 30, 2016 transpired and the need to
make clear to Council and CAFR readers the cause and makeup of these variances comprising both permanent
and timing factors. Similar work needs to be completed to understand the large favorable budget variance in the
Sewer Fund, which are not currently documented in the draft CAFR. Suggestions related to disclosure of OPEB
liabilities, and Pension unrecorded liabilities were discussed and staff indicated they would be accommodated to
the extent allowed by GASB and GFOA rules. Ms. Lin indicated an updated final draft of the CAFR will be
prepared before the end of November and distributed to interested Committee members along with
memorandum explaining changes made which will be presented to Town Council in its December meeting.
Continued
November 7, 2016 FIC minutes, continued page 2.
Report by John Harpootlian and Gary Waldeck on recent Council Activities of interest.
Mayor Harpootlian noted that the Town hired a new Public Works Director/City Engineer, Mr. Allen Chen; the
Wildland-Urban Interface Fire Area “WUI” Planning Commission recommendation was not accepted by
Council resulting in the elimination of all WUI designated areas in Town, four private roads were accepted by
the Town as public roads at an estimated repair cost of $350,000, and a new permit database software package
was purchased at a cost of $165,000.
Report by Pak Lin on Finance Department activities of interest
Ms. Lin stated the Finance staff has been consumed with the audit and CAFR and work on other priorities would
be resumed at the completion of this effort.
Presentations from the Floor
None.
Proposed topics and dates for future meetings
The next FIC meeting will be a Special meeting on Monday, December 12, 2016 at 4pm. The non recurring
topics will be a review of ABAG Liability Insurance deferred from the July meeting, a review of cash
management internal controls pursuant to the new Wells Fargo Agreement and a discussion of Wells Fargo’s
recent publicity about internal control failures related to the creation of fictitious customer accounts.
Other topics for future meetings are: Workers Comp provider change, Review of long term capital plans and
related policies; Prepayment of OPEB and Pension liabilities; Financial policy and procedures review;
Description of new Planning and Building software ; Review of FIC Monthly Project Summary Report; Review
Finance Department quarterly report on financial controls; Over/under absorption of Building and Planning fees;
Audit of franchise fees (assure annexed area fees are included and Purissima Water status); Sewer CIP status
report comparing planned to forecast spending and related cash management plan; Update cost allocation model
for 1) internal service programs and 2) improve recurring overhead allocation; Reserve Policy updates; Improve
long term capital plan to include vehicles, equipment and buildings.
Adjournment: The meeting adjourned at 6:00 pm
Respectfully submitted by Roddy Sloss, Committee Secretary